Date note: The stated event date is August 5, 2026, which is today, not tomorrow. No 2Q26 release or call transcript was available in the research materials, so this is a pre-results preview.
Zimmer Biomet enters 2Q26 with a credible operational story but a high bar for proof. The company began the year near the top end of its organic-growth framework, raised adjusted EPS and free-cash-flow expectations, and continues to see strong uptake in technology, hips, shoulders, and foot & ankle. However, the core knee franchise remains below market growth, international growth was soft in 1Q, and management has explicitly guided to a sharp year-over-year margin decline in 2Q as it funds its U.S. commercial transformation.
The quarter therefore matters less for the headline adjusted EPS result than for whether ZBH can demonstrate:
ZBH closed at $95.83 on August 4, up roughly 3.5% from the close immediately before 1Q results on April 28, but still reflecting a more cautious setup than the broader large-cap medtech group after the initial post-1Q selloff. That leaves room for a favorable reaction if execution and guidance credibility improve.
| 2026 outlook, updated after 1Q | Company guidance |
|---|---|
| Reported revenue growth | 2.5%–4.5% |
| Constant-currency revenue growth | 2.0%–4.0% |
| Organic constant-currency growth | 1.0%–3.0% |
| Adjusted diluted EPS | $8.40–$8.55 |
| Free-cash-flow growth | 9%–11% |
| Assumed price erosion | Up to 100 bps |
| Planned share repurchases | Up to $750 million |
| 2Q26 adjusted operating-margin commentary | Approximately 200 bps below 2Q25 |
The most important setup point is that management did not lift revenue guidance after a strong 1Q. It raised adjusted EPS by $0.10 at the midpoint, but much of the 1Q upside came from tariff-related items and timing. Investors will want evidence that revenue momentum, rather than one-time P&L support, is improving.
In 1Q26, organic constant-currency sales grew 2.9%, at the upper end of the full-year guide. But the result benefited from above-normal end-of-quarter purchases, while U.S. and international commercial-model changes created some disruption.
For 2Q, a reasonable operating lens is for reported revenue to grow in the low-single digits against the $2.077 billion reported in 2Q25. Foreign exchange was expected to be roughly neutral in 2Q at rates prevailing during the 1Q call. The quarter also contains a small remaining acquisition-comparison benefit from Paragon 28 around the April 2026 acquisition anniversary.
What would be constructive: organic growth at or above the high end of the 1%–3% framework, supported by hips, technology, and a less weak knee result.
What would concern investors: sub-1% organic growth, another quarter of meaningful international underperformance, or commentary suggesting that sales-force changes have become more disruptive than planned.
Knees are ZBH’s largest product category—$829 million in 1Q26—and the main source of skepticism. Organic knee growth was only 1.8% in 1Q, including 2.2% in U.S. knees, despite management estimating the underlying reconstruction market at roughly 4%–4.5% growth.
The weakness was partly self-inflicted:
Management expects acceleration as technology placements convert into implant demand and as the go-to-market transition matures. That thesis needs to become visible in 2Q results or at least in exit-rate commentary.
Key KPI: U.S. knee growth. A move materially above the 1Q 2.2% level would support the recovery narrative; another low-growth result would reinforce concerns that the commercial transition is costing share.
Technology, data, bone cement, and surgical sales grew 11.7% organic constant currency in 1Q, with management indicating that the underlying robotics/technology component grew approximately 30%. ROSA, TMINI, OrthoGrid, and the broader digital ecosystem are central to ZBH’s plan to improve implant pull-through.
Several upcoming catalysts matter strategically:
Technology growth alone will not settle the investment debate; investors will look for evidence that technology placements are translating into stronger hips and knees, particularly in converted accounts and ambulatory surgery centers.
Management set expectations clearly: 2Q adjusted operating margin should be approximately 200 bps lower year over year, reflecting commercial investments, Paragon 28 dilution, and a less favorable gross-margin setup than in 1Q.
This is important because 1Q adjusted operating margin expanded 110 bps to 27.3%, but that strength was helped by tariff-related benefits. Management quantified approximately $0.20 per share of 1Q benefit from the invalidation of IEEPA tariffs, with roughly half viewed as a pull-forward from the second half of the year. That benefit should not be extrapolated into 2Q.
The company still expects full-year operating margin to decline by slightly less than 50 bps versus 2025. Therefore, the central call question is not whether 2Q margins are down—it is whether management can credibly explain the bridge from a roughly 200-bp year-over-year 2Q decline to a much more manageable full-year decline.
Watch for:
ZBH is moving its U.S. organization toward a more dedicated, specialized sales model, with completion targeted by the end of 2027. At the end of 1Q:
Management says territories already converted to dedicated sales coverage have seen double-digit increases in cases per rep and better sales productivity. That is the bull case: short-term disruption in exchange for structurally higher rep productivity, better specialist coverage, and stronger technology commercialization.
The bear case is that the investment period lasts longer, guarantees keep costs elevated, or customer/rep disruption continues into 2027.
Paragon 28 is improving. Management said growth accelerated roughly 200 bps sequentially in 1Q and had reached the teens early in 2Q, with a goal to exit 2026 at double-digit growth. It broadens ZBH’s exposure to the faster-growing foot-and-ankle market and remains a positive diversification lever.
But there are two risks to monitor:
International performance is the nearer-term concern. International organic growth was only 2.5% in 1Q, as distributor changes in China, emerging markets, the Middle East, and parts of Europe created disruption. Management expects international growth to improve to the mid-single digits in the second half. Any indication that this normalization is on track would be a meaningful positive.
| Metric | 2Q25 actual | 1Q26 actual | Why it matters for 2Q26 |
|---|---|---|---|
| Revenue | $2.077B | $2.087B | Low-single-digit reported growth is the broad setup |
| Organic CC growth | 2.8% | 2.9% | Must validate that 1Q was not mainly timing-driven |
| Adjusted EPS | $2.07 | $2.09 | 2Q margins face a much tougher setup than 1Q |
| Adjusted operating margin | 27.8% | 27.3% | Company has guided to ~200 bps year-over-year decline in 2Q |
| U.S. knee organic growth | 1.7% | 2.2% | The largest product-category proof point |
| Hip organic growth | 4.0% | 3.2% | Sustained mid-single-digit U.S. hips would be favorable |
| Technology/data/bone cement/surgical organic growth | -2.2% | 11.7% | High-growth technology can drive future implant pull-through |
| S.E.T. organic growth | 4.9% | 1.6% | Paragon contribution masks mixed underlying performance |
What was 2Q organic growth by U.S., international, knees, hips, S.E.T., and technology?
The composition of growth will matter more than consolidated reported sales.
Did U.S. knee growth improve, and are lost accounts being recovered?
Investors need confirmation that conversion to Persona, new-product launches, and commercial changes are beginning to offset disruption.
How much of 1Q’s end-of-quarter purchasing benefit reversed or normalized in 2Q?
This is essential for assessing the quality of the 1Q beat.
Is international distribution disruption peaking?
Investors should seek specific evidence supporting the company’s expected mid-single-digit international growth in the second half.
Is the sales-force transformation on schedule and within the investment envelope?
Metrics on dedicated-rep conversion, turnover, productivity, and account retention would be especially useful.
Can management reaffirm or raise the $8.40–$8.55 adjusted EPS range?
A reaffirmation may be acceptable if revenue execution strengthens and the company preserves its expected second-half margin recovery.
What is the updated tariff and gross-margin outlook?
The first-quarter benefit was material and non-recurring; investors need a clean underlying gross-margin bridge.
ZBH’s 2Q26 report is a prove-it quarter. The company has the ingredients for a stronger medium-term story—technology momentum, a differentiated robotics pipeline, improving foot-and-ankle exposure, cash generation, buybacks, and a potentially more productive commercial model. But the market will likely demand evidence that these investments are beginning to translate into core reconstruction growth, particularly in knees, without causing a more prolonged margin drag.
Bullish outcome: organic growth at or above the high end of guidance, improved U.S. knees, stabilizing international trends, contained 2Q margin pressure, and maintained or raised full-year EPS guidance.
Bearish outcome: organic growth below plan, persistent knee/share weakness, deeper international disruption, or a full-year guide that suggests the 2Q margin trough will not recover as expected.
Sources reviewed: Zimmer Biomet 1Q26 earnings release and conference call (April 28, 2026); 1Q26 Form 10-Q (filed May 1, 2026); 2Q25 earnings release; and market-price data through August 4, 2026.